Aug 20, 2005

A Texas jury has found drug maker Merck & Co. Inc. negligent in the death of a man who took its popular painkiller Vioxx and awarded his widow $253 million in the first of thousands of Vioxx lawsuits to go to trial.

The stunning verdict was certain to be greatly reduced under Texas law, but Merck’s stock fell sharply as investors feared it could set a precedent for more than 4,200 lawsuits charging that the company hid the drug’s health risks.

Merck pulled Vioxx off the market in September 2004, saying its long-term usage could double users’ risks of heart attack or stroke.

Merck shares fell $2.35, or 7.73%, to $28.06 and put a damper on the Dow, which ended up just 4.3 points to 10559.23.

The case filed by widow Carol Ernst charged that Vioxx had caused her husband, Robert Ernst, a 59-year-old marathoner who took the drug for eight months, to die of a heart attack in 2001.

Merck disputed the accusation, saying an irregular heartbeat and clogged arteries killed Ernst, not Vioxx.

But the 12-member jury in Texas state court voted 10-2 that Merck should pay $24 million to Carol Ernst for mental anguish and loss of companionship and $229 million in punitive damages.

Merck attorney Jonathan Skidmore said the company would appeal the decision, but estimated that even if it is upheld the punitive damages would be trimmed to less than $2 million.

Texas law limits punitive awards to two times economic damage – in this case $450,000 – plus up to another $750,000. There is no financial limit for loss of companionship and mental anguish.